Chavez Ambitions in Venezuela, Abroad May Shrink With Oil Price

(Bloomberg) — The same tumbling oil prices that led OPEC to slash output last week threaten to send Venezuela’s economy into a tailspin, and put an end to President Hugo Chavez’s ambitions to expand his socialist revolution at home and abroad.

…“You have a country with an oil boom, that doesn’t know how to save, doesn’t know how to set up productive industries that generate jobs, and goes into debt,” said Elsa Cardozo, a professor of political science and international relations at the Universidad Central de Venezuela. “Then oil prices fall and the party ends.”


Venezuela may be poised to repeat the economic collapse it suffered in the 1980s at the end of its last oil boom. Former President Carlos Andres Perez, employing policies similar to Chavez’s, lavished petrodollars on public works projects, foreign aid and nationalizations in the late 1970s, setting the stage for a 1983 currency devaluation and spending cuts that sent millions of Venezuelans into poverty.

“Venezuela is now more dependent than ever on oil,” said Jose Toro Hardy, a former board member of state oil company Petroleos de Venezuela SA. “Venezuela is the most vulnerable country in all of Latin America to a falling oil price.”

Bloomberg